WIRED25: The Future of Work With Patrick Collison, CEO of Stripe
Released on 10/12/2018
(crowd applauding)
Alright, so Stripe is an extraordinary company.
You have two products that many people know.
One is Payments Processing,
so if you're a startup, you don't want to handle,
you don't want to worry about banks,
you don't want to worry about the law,
you don't want to worry about that stuff,
you just offload it to Stripe.
Put in a couple lines of code, offloads it to Stripe.
They also launched recently,
more like six months ago,
nine months ago?
A bit more, but it's only now,
I think, starting to garner the justified appreciation.
So they launched a product called Stripe Atlas,
and that solves a different problem,
which is if you want to incorporate an entire company,
they will do it for you.
And they'll do it in Delaware,
and they will set you up with a bank account.
They'll do everything for you.
In fact, 20% of all new technology companies
are through Stripe Atlas, which is extraordinary.
So very cool company, just valued at 20 billion dollars,
not a joke.
Alright, so my first question.
So when Stripe started and you read about it,
it was always about start-ups
and not just about start-ups,
it was about kind of open source, like idealistic start-ups,
it seemed like.
But then you also started doing payments
for like Amazon, Facebook, Apple,
and now you do payments for offline companies.
And so, my question for you is
is Stripe changing the way capitalism works
or is Stripe just enabling the capitalism that we have now
but making it slightly more efficient in every way?
Well, that's a big question to start with.
I know, it's the first question of the weekend, man.
So it's great to be--
And this guy's really smart, by the way.
You should read his blog.
He not just runs a good company,
he's like really, really smart and reads lots of good books.
Okay, back to regularly scheduled programming.
Fake news is a pervasive problem throughout the media.
It's great to be here.
Wired has been,
since I was just a very small bit, older than five,
a sort of a symbol of technology,
optimism and hope for me.
I was reading Louis' piece in the 25th anniversary issue
on a trip last week,
and I loved his sort of articulation
of situating Wired in the culture,
kind of when Wired started out was being kind of accused
of this Panglossian optimism
and sort of the need now in this kind of environment
of sort of growing pessimism
for a kind of militant optimism.
So three cheers for that.
But to your question.
I always liked Deirdre McCloskey, the economist,
Deirdre McCloskey's kind of rejection of
sort of the notion of capitalism
or rather the fixation in the description of,
or in the word capitalism, I guess,
the fixation on capital.
In her terms, capitalism represents a kind of
mistake in nomenclature,
and that actually the core of capitalism
is opportunity.
This is what changed in the 18th century
or whenever we sort of set the t equals zero
for this crazy exponential takeoff we've had.
But change then is not something that our capital markets
or the availability of capital or whatever,
but rather, in her terms, a novel liberalism of inclusion,
a novel liberalism of inclusion.
And so, I think Stripe is a kind of
digital online version of that,
where what we're trying to do is to sort of
build economic infrastructure for the Internet
and to sort of try to create opportunities
for people to build products, implement business models,
expand globally to sort of take something
that they can build in their bedroom
and sort of deploy it at full planetary scale
and importantly kind of do so
in such a way that the most important tools
and the most sophisticated advanced functionality
is available not only to the biggest companies in the world
but only to kinda literally two people starting out
in their bedroom.
You mentioned some of the really large companies
that use Stripe.
What I love about their use of Stripe
is that in almost every case,
they're not using the,
we're not executing the sort of
traditional enterprise playbook,
whereby, unless you're kind of doing millions of dollars,
you want to pay us millions of dollars a year,
we won't talk to you.
They're using the same version of Stripe
that an Atlas founder in Nigeria just starting out
can take advantage of.
And so, internally, as we kind of articulate
Stripe's long term goals, one of the,
the third one in fact is that we try to be
an anti-incumbency force.
We want to kind of reduce activation energy barriers.
We want to make incumbency less of a competitive advantage.
And so, kind of to your question as to
how Stripe is kind of affecting the overall ecosystem here,
I want to caveat with,
I'll leave it to others to decide
to what degree we are overall.
We're still a small company in the scheme of things.
However, our goal is to the extent
that we're having some impact,
that yeah, we're kind of making large companies
able to operate more effectively
and to do more and all the rest,
but that on net, we're arming the upstarts.
The anti-incumbency bias, super interesting point.
And I understand that.
You do help the incumbents,
but you help them with the same code
that you help the Egyptian startups.
Understand that argument.
How far would you take this though?
Stripe's getting pretty big.
You're taking an ever larger portion of the payment space.
When do you become a dominant incumbent,
and when you reach that position,
do you worry about the effect you'll have on the economy?
We have a monopolist-centered tech economy.
You're gonna become one of those
at your current trajectory.
What will you do when you become a giant monopolist?
Well-- (audience laughs)
there's a long way to go
before top of our list of concerns is our excessive size.
But let's thought experiment.
What would you do?
Because none of the people who've reached that point
have given it up.
So three points.
First, part of the reason we have
Stripe being an anti-incumbency force
as being kind of one of our explicit,
written down long term goals
is so that we're kind of bound to it.
And so, we can't decide if and when we become
some much larger pillar of the internet economy,
that actually hey, those upstarts aren't so great after all,
let's just sort of help the cozy club,
the entities which prevail around us in that moment.
So first.
Second is I think that
I'm not sure this narrative of tech monopoly is true.
I don't want to say that it's completely untrue,
but if you look at it just kind of
a sort of tech market cap concentration,
the tech industry does not appear to be more concentrated
today than it was 10 years ago, 20 years ago, 30 years ago.
If you just look at it over time,
it's been sort of, it's been fairly consistent.
There's certain verticals that get more concentrated,
but there's so many more verticals,
the total amount of concentration.
Not even that.
If you just look kind of at S&P 500,
a percentage of the technology sector
occupied by the top four technology companies,
that does not seem to be more concentrated
than it was in the past.
However, there is something, I think,
important going on here,
which is economy-wide, we are definitely seeing
much more concentration.
And so, there're kind of various studies around this,
but you just take the median industry,
the median industry by either market cap or by revenue,
is to getting more concentrated,
and anecdotally, we kinda see this.
30 years ago, there were many airlines,
now there's only a very small handful.
30 years ago, there were many banks,
now there's only a very small handful.
You look at it globally.
Semiconductors, 30 years ago, many different kinds of
semiconductor companies, and now there really are only
three meaningful,
not just in the US, but they're on a global basis.
And so, I almost wonder if we have the narrative backwards,
where, and again, I don't want to kinda be dismissive
of some of the kind of important questions that exist
around technology companies,
but to me it almost looks like
the tech industry is not more monopolistic
than it has been in the past.
However, every other sector is certainly
getting more concentrated.
And then you have those kind of nuanced questions around,
well, should we be looking at kind of
sort of revenue concentration
or should we be looking at monopoly pricing?
And obviously with regard to the tech trends in particular,
that's kind of a subtle question
because on the one hand, they're doing a lot,
but then on the other hand,
they're not charging a lot.
And so I think its-- Facebook is very
inexpensive to use, unless you value your privacy.
There you go, right, right, right.
So I'll pause there.
Okay.
Let me go back
and I want to ask you one of the questions about
what got us to this point.
So you've spoken eloquently in previous interviews,
and you have said, there were decisions made
in the past 25 years about global Internet architecture
which were good,
and those were a lot of decisions that were made,
Mac, in 1993, in the period shortly thereafter.
And then there were a bunch of decisions
made about global Internet architecture which were bad
and led to some of the problems we have today.
Explain some of the decisions that were bad,
and explain how we can make better decisions
in the next quarter century.
(Patrick laughing)
That's easy.
Yeah, I was gonna say, right, right.
Yes or no, Patrick,
yes or no. Just keep it going,
keep it going with the softballs.
So okay, I think, whatever I was rambling about before,
I think probably was getting at was
I always found it very,
as a general matter, one of the most amazing
kind of intellectual exercises of the past 50 years
is the kind of, the overall architecture of the Internet
and not just that which happened
around the creation of the web and HTML and all the rest,
but that which preceded us in TCP
and this sort of ethernet
and the core protocols and everything else.
And to your point, they were sort of
carefully thought through,
and the kind of scale and variance and all the rest
is really so amazing.
And it's just so phenomenal,
that sort of Jeff Dean at Google talks about how
any technology you invent that sort of grows
by more than two orders of magnitude,
you generally have to kind of re-architect from scratch.
Jeff Dean at Google is the guy who creates
MapReduce and Bigtable and a whole bunch of their other
coolest technologies.
What's amazing about the Internet is like,
these guys invented it in late 60s, 70s, 80s and so on,
and it's grown by sort of
a dozen orders of magnitude
and we haven't had to rebuild the core technologies.
Okay, what's bad?
So, speaking our own narrow solopsistic book,
I mean payments are bad.
Maybe that's good or bad from our standpoint.
It certainly yields an opportunity for us,
but you know it is very funny to go back,
and look at the early error codes
in the HTTP specification.
Where there is this kind of,
the 404, we're all familiar with
and then there's 402 the Payment Required error code.
And it's there in the spec to be implemented.
For such a core piece of functionality of the internet,
it does seem kind of funny/tragic that
so many decades into the web's history,
and given the central importance
of being able to generate a sustaining income
from the Internet that it has gone so undone,
and underbuilt.
There's lots of other aspects as well,
where I think.
I mean,
Alan K. talks about how remarkable a culture,
and how singular the group was that invented many
of the core protocols of the Internet.
The folks at Park, and the way in which they were inspired
by the Rad Lab at MIT and all the rest,
and just this amazing cornucopia,
excuse me Cambrian Explosion of innovation.
So I guess the question I find myself thinking about,
and wondering is, well, was there a particular ethos,
and culture, and set of connections in individuals,
and set of mentors and inspiration they had
that really served us well in, say, the 25 years before '93.
Has some of that been lost now, and to that's been lost,
how do we regain it?
Let me dig in to one subset of that,
so you're talking about four payments early on.
One of my favorite facts about Stripe,
is that the way they raised money is they went to
the Founders of PayPal and were like,
Payments are broken, give us money!
And they got it, which is extraordinary.
If payments had worked better in the early Internet,
is there an alternative history whereby the most important
companies that were to develop decided
to make their revenue on selling things?
Whether subscriptions or something else,
as opposed to advertising.
'Cause that's like one of the foundational decisions
that leads to the Attention Economy.
Yes.
It was funny trying to raise money from the PayPal people,
in that, I remember reflecting after my first meeting
with Peter Thiel, and I was cycling back
from the protidio, and being like
Shit, you know it probably wasn't such a good idea
to tell him that PayPal was terrible.
(Nicholas laughing)
But Peter was such a contrarian thinker,
that he told me years later that he didn't think PayPal
was terrible, but he thought he was probably too biased
to think that PayPal was good.
So the fact that I was making this other argument,
he thought was a reason he should invest in Stripe.
I don't quite know how all the logic works,
but we benefited from it so, won't complain.
When we started Stripe this was part of our thesis,
on the margins there was more advertising
than there would be if payments worked well.
Many things were using ads, because ads were easy.
Payments were hard.
You could shift the balance in the other direction.
That was kind of a hypothesis within,
oh kind of clear counterfactual,
back when we were starting Stripe.
Now as the Chinese Internet has burgeoned,
it's actually become much more clear
that this is indeed the case.
At least in as much as you believe that
Chinese consumer preferences are representative
of American consumer preferences.
For example in the podcast base, we're all familiar
with the services that we know and love from listening
to our favorite podcasts, and hearing their endorsements
every 10 or 15 minutes.
But in China the prevailing monetization mechanism for
podcasts is payments.
It's totally different, it's kind of the same product but
monetized fundamentally differently.
And incidentally the Chinese podcast economy appears
to be quite a bit more lucrative.
You know there's other stuff you have to normalize for,
what are they competing against and so on,
but as a general matter it seems to be working
very well there.
So, yes, in short I would say I agree.
Great
(audience laughing)
But
I love-
But I'm biased, look.
Alright last question since we're almost out of time,
Wired started in these offices, because Silicon Valley
was blown up around these offices,
or I think we moved here in 1994.
Stripe is right around the corner.
You're enabling entrepreneurs all over the world,
is Silicon Valley still going to be like this in 25 years?
Is it still going to be so dominant, or will we have
finally dispersed?
I think that the returns of agglomeration
are very high, right?
Romer just won the Nobel Prize, and he's obviously
one of the foremost scholars of this,
so I think absent self sabotage,
I think Silicon Valley should, I don't mean normally should,
but absent self sabotage Silicon Valley probably would
remain substantially preeminent,
and obviously has had remarkable durability
since the '30s, or since Fairchild, or whatever.
However, we do seem to be engaged in this, kind of...
I of course don't think that anybody is deliberately
sabotaging Silicon Valley, but there is an emergent
self sabotage that is occurring
in the form of a trifecta maybe,
of land prices, and housing costs and so on.
Second which is kind of a domestic mobility restriction,
it's becoming ever harder for people who aren't benefiting
from the opportunities in Silicon Valley to come here,
and to do so.
There is an international mobility barrier,
in the form of immigration laws and rules,
which you know they've always been bad,
but or at least they've never been great,
and the margins are maybe getting slightly worse,
but there's certainly a kind of significant impediment.
Certainly as other countries advance and develop their own
ecosystems the comparative advantage to the US
is diminishing.
Thirdly a kind of cultural,
well I was going to say degradation.
I won't say degradation, a cultural change.
Others can decide whether it's for good or ill,
but I was just talking to Louis and he was just saying
how today in Silicon Valley those who are positive,
those who are optimistic, they are now the revolutionaries,
and the counter culture.
That's a remarkable statement, we're supposed to be the
epicenter of innovation in the world.
It is now the case that there is such a prevailing kind of
mood and weather of cynicism and pessimism,
and um negativity,
that I think it does in fact substantially,
challenge our fundamental role,
and more importantly
our fundamental opportunity.
I think it's so easy sitting here...
San Francisco is rarely accused of being a representative
example of what it's like to exist in some random place
in the world.
San Francisco is not normal, and I think in many ways
that's good, but the downside is that since Wired
was founded the size of the global middle class has tripled.
Now more than half the world's population is in the
middle class, and everyone here is familiar I'm sure
with the endless statistics
about how things are getting better,
and yet somehow that is not
internalized in our mood.
The mood is somehow that things are getting worse,
and I think a central question for the next 25 years
is where does that mood go?
Because ideology and symbolism and aspirations
really matter.
Alright well my mood is better
having listened to this man for 20 minutes.
(audience laughing and applauding)
So thank you very much Patrick Collison,
thank you for coming on stage.
Thank you.
Starring: Patrick Collison
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